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>There is no wealth / money / assets being created or destroyed by Bitcoin going up or the coin count increasing. That's false. There is electricity being spen

>There is no wealth / money / assets being created or destroyed by Bitcoin going up or the coin count increasing. That's false. There is electricity being spent, and the security of all transactions before the current block being further secured by each new block. you might not think it's a valuable thing, but many others do, and you can't just discount it as not existing because you don't see the value. Just like how you might not see the value in videogames, or shitty daytime TV, but that doesn't mean it's worthless, just that it's not something you value. Bitcoin is a service that allows trustless transactions, and that service costs in the form of electricity usage.

adventured 9y ago
> you might not think it's a valuable thing, but many others do, and you can't just discount it as not existing because you don't see the value. I never said any such thing at all. I never said Bitcoin wasn't worth anything, in fact everything I said implies that people were obviously willing to swap / trade etc. with it (the implication is that it's worth something). I said Bitcoin does not involve the creation of any new value (as in, any net new value). It doesn't. When you seek to utilize Bitcoin, all instances involve value swapping, not net new value creation. If you mined 1,000 Bitcoins, for you to enter them into the economy you must swap them against something else, for example $USD currency (or a car or a house, whatever). Nothing new is generated in that process, you're swapping positions. I get the 1,000 coins, you get the $USD which I was just holding. That's why Bitcoin is clearly a value store. Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As each coin is not mined over and over again, per unit of activity the electricity cost of each coin averaged plunges over time (eventually becoming insignificant given numerous years). Not to mention, most bitcoins were not mined at a meaningful electricity cost, which dramatically dilutes the whole as well.
- Klathmon 9y ago
  For starters... >Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As each coin is not mined over and over again, per unit of activity the electricity cost of each coin plunges over time (eventually becoming insignificant given N years). That's not true. Because in order to spend the transaction, it must be mined again. The amount of electricity cost of each coin doesn't plunge, it increases with each transaction, and stays the same if the "coin" doesn't move. At a point in the future no new bitcoin will be created, and at that time the only incentive to mine will be transaction fees which will pay for the electricity cost of the continued mining for validating transactions. It's not an insignificant cost, it's the only significant cost. >When you seek to utilize Bitcoin, all instances involving value swapping. By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground. And please don't say that it's different because it's "physical". You seem to be hung up on the "swapping" aspect, which I never said was the "value add" of bitcoin, it's not, you are correct that simply trading bitcoin doesn't add anything of value. But transacting bitcoin does, it provides the value of enabling trustless transactions quickly and without any "gatekeeper". Edit: I think I just realized the problem. Your definitions only make sense if you mine the coin once, then trade it off the blockchain forever (as in physically or virtually sending the bitcoin keys to someone else in return for some kind of good or service). That's not how most people use bitcoin, and doing it that way removes all of the benefits and "value add" that I talk about, and indeed is just a store of value at that point. So you are correct, but if you transact bitcoin in the blockchain, suddenly it becomes something more than a store of value, it provides value. It provides security, trustless transactions, immutable history, and more.
  - adventured 9y ago
    Re: electricity To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. Their cost to hold that coin is also relatively trivial, they did not have to expend vast electricity cost to mine it just so they can receive it; they don't have to buy tens of thousands of dollars worth of hardware to hold or acquire that coin, etc. > By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground Mining leads to dramatically higher utility value extraction of the thing being mined in most cases (which is typically the point of the mining), other than eg raw gold or silver store (both of which also have some industrial use value that can significantly amplify their foundational value). You generally don't pull coal or oil or lithium from the ground to utilize it as a value swapping device. You mine them to put them into an industrial process that dramatically increases their value. Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. Mining is one of the great examples of net new wealth creation, mostly thanks to unlocking of energy over centuries of scientific advancement. You could hardly have picked a worse example. For example unlocking oil, which is considered a form of mining for economic purposes, takes a non-acting asset in the ground, which can then be unleashed due to its immense energy concentration. Our technological progress can further improve the utilization. Plastics as a global, highly useful industry for example, was impossible a thousand years ago; scientific progress unlocked that new net value. Bitcoin doesn't actually store electricity, whereas oil continues to retain its energy potential whether we think it's valuable as an energy source or not (eg if we all switch to solar). That's a literal property of oil. If the world replaces Bitcoin with the next great coin and its value goes to zero (whether in 7 years or 27 years), there's no electricity actually stored by the value-dead coins. It's the very real difference between oil having tangible chemical properties and Bitcoin being digital. Coal as another example along with oil, takes a non-acting thing from the ground, which can then unleash vast energy that previously was not being utilized. Scientific processes can further unlock and enhance that value, make it dramatically greater, as was the case in its original entry into the economy. Further, industrial processes can then amplify the things mined from the ground. In 1750, we had no means to utilize oil meaningfully, and then progress on chemistry allowed us to unlock that potential. Farming and timber are two other good examples of new net value creation systems derived from dramatically amplifying an existing thing. Blockchain and the services built on top of it, are where most of the net new value will be created ultimately. As in the case of the industrial applications of things mined from the earth, or farm land, etc. Bitcoin will very likely remain a value swapping entity. Blockchain, assumingly leading to all sorts of new services in the coming years, will likely enhance economic productivity, which is where net new wealth comes from. Most new wealth created is derived from time/labor saved and similar (thus oil applied thanks to science has been an extraordinary net new wealth generator). Bitcoin is not a very meaningful device toward that, its transaction costs have made it heavily impractical as a potential superior transaction system or currency (in which case it could have acted as a productivity booster, eg by saving people time or fees). Other crypto coins that possess superior properties to bitcoin for those purposes may fill that role.

adventured 9y ago

> you might not think it's a valuable thing, but many others do, and you can't just discount it as not existing because you don't see the value. I never said any such thing at all. I never said Bitcoin wasn't worth anything, in fact everything I said implies that people were obviously willing to swap / trade etc. with it (the implication is that it's worth something). I said Bitcoin does not involve the creation of any new value (as in, any net new value). It doesn't. When you seek to utilize Bitcoin, all instances involve value swapping, not net new value creation. If you mined 1,000 Bitcoins, for you to enter them into the economy you must swap them against something else, for example $USD currency (or a car or a house, whatever). Nothing new is generated in that process, you're swapping positions. I get the 1,000 coins, you get the $USD which I was just holding. That's why Bitcoin is clearly a value store. Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As each coin is not mined over and over again, per unit of activity the electricity cost of each coin averaged plunges over time (eventually becoming insignificant given numerous years). Not to mention, most bitcoins were not mined at a meaningful electricity cost, which dramatically dilutes the whole as well.

Klathmon 9y ago
For starters... >Electricity cost, which you mention, over time ends up being a small fractional cost, little different than the existing transaction fees. As each coin is not mined over and over again, per unit of activity the electricity cost of each coin plunges over time (eventually becoming insignificant given N years). That's not true. Because in order to spend the transaction, it must be mined again. The amount of electricity cost of each coin doesn't plunge, it increases with each transaction, and stays the same if the "coin" doesn't move. At a point in the future no new bitcoin will be created, and at that time the only incentive to mine will be transaction fees which will pay for the electricity cost of the continued mining for validating transactions. It's not an insignificant cost, it's the only significant cost. >When you seek to utilize Bitcoin, all instances involving value swapping. By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground. And please don't say that it's different because it's "physical". You seem to be hung up on the "swapping" aspect, which I never said was the "value add" of bitcoin, it's not, you are correct that simply trading bitcoin doesn't add anything of value. But transacting bitcoin does, it provides the value of enabling trustless transactions quickly and without any "gatekeeper". Edit: I think I just realized the problem. Your definitions only make sense if you mine the coin once, then trade it off the blockchain forever (as in physically or virtually sending the bitcoin keys to someone else in return for some kind of good or service). That's not how most people use bitcoin, and doing it that way removes all of the benefits and "value add" that I talk about, and indeed is just a store of value at that point. So you are correct, but if you transact bitcoin in the blockchain, suddenly it becomes something more than a store of value, it provides value. It provides security, trustless transactions, immutable history, and more.
- adventured 9y ago
  Re: electricity To utilize bitcoins, you do not need to go through the now extremely electricity intensive process of mining them each and every time. For example, the electricity transaction cost to send my friend a coin for payment for something, is trivial. Their cost to hold that coin is also relatively trivial, they did not have to expend vast electricity cost to mine it just so they can receive it; they don't have to buy tens of thousands of dollars worth of hardware to hold or acquire that coin, etc. > By that definition all physical mining doesn't create any value, since people are just "swapping" their currency for whatever you dug out of the ground Mining leads to dramatically higher utility value extraction of the thing being mined in most cases (which is typically the point of the mining), other than eg raw gold or silver store (both of which also have some industrial use value that can significantly amplify their foundational value). You generally don't pull coal or oil or lithium from the ground to utilize it as a value swapping device. You mine them to put them into an industrial process that dramatically increases their value. Bitcoins are almost exclusively mined as a value store / value swapping device, as is the case with gold. Mining is one of the great examples of net new wealth creation, mostly thanks to unlocking of energy over centuries of scientific advancement. You could hardly have picked a worse example. For example unlocking oil, which is considered a form of mining for economic purposes, takes a non-acting asset in the ground, which can then be unleashed due to its immense energy concentration. Our technological progress can further improve the utilization. Plastics as a global, highly useful industry for example, was impossible a thousand years ago; scientific progress unlocked that new net value. Bitcoin doesn't actually store electricity, whereas oil continues to retain its energy potential whether we think it's valuable as an energy source or not (eg if we all switch to solar). That's a literal property of oil. If the world replaces Bitcoin with the next great coin and its value goes to zero (whether in 7 years or 27 years), there's no electricity actually stored by the value-dead coins. It's the very real difference between oil having tangible chemical properties and Bitcoin being digital. Coal as another example along with oil, takes a non-acting thing from the ground, which can then unleash vast energy that previously was not being utilized. Scientific processes can further unlock and enhance that value, make it dramatically greater, as was the case in its original entry into the economy. Further, industrial processes can then amplify the things mined from the ground. In 1750, we had no means to utilize oil meaningfully, and then progress on chemistry allowed us to unlock that potential. Farming and timber are two other good examples of new net value creation systems derived from dramatically amplifying an existing thing. Blockchain and the services built on top of it, are where most of the net new value will be created ultimately. As in the case of the industrial applications of things mined from the earth, or farm land, etc. Bitcoin will very likely remain a value swapping entity. Blockchain, assumingly leading to all sorts of new services in the coming years, will likely enhance economic productivity, which is where net new wealth comes from. Most new wealth created is derived from time/labor saved and similar (thus oil applied thanks to science has been an extraordinary net new wealth generator). Bitcoin is not a very meaningful device toward that, its transaction costs have made it heavily impractical as a potential superior transaction system or currency (in which case it could have acted as a productivity booster, eg by saving people time or fees). Other crypto coins that possess superior properties to bitcoin for those purposes may fill that role.